How to Remove Pattern Day Trader Status Robinhood
There are different types of traders on Robinhood.
There are those who open a trading account to participate in the stock market from time to time, and there are others who use their brokerage account for day trades.
Day trade on Robinhood is one of the most standardized activities on the platform.
Robinhood financial platform can be used for a wide variety of processes, but there are some rules that everyone must comply with.
Not everyone is a day trader, but if your account has been marked as a pattern day trader one, then you will have some limitations related to it.
In this blog post, we are going to teach you everything you must know about:
- How to remove Pattern Day Trader status Robinhood;
- Understanding pattern day trade and its consequences;
- What a trading day is and everything that implies.
Understanding Pattern Day Trading Rules
Robinhood must comply with the Financial Industry Regulatory Authority ( FINRA) laws in order to offer pattern day trade protection to all their users.
Granting commission-free trades is only possible by following a minimum equity requirement so all account holders, including most day traders, can experience a safe platform.
Thus, it’s imperative to understand why margin accounts can be flagged as a Pattern Day Trader in case a violation appears.
Read Also: Is your Robinhood Account Restricted from Purchasing?
If your account is facing any kind of limitation, whether it has something to do with day trading or not, it’s fundamental to comprehend what’s happening so you can find a proper solution for the issue.
What is a Day Trade?
Let’s say that you buy a stock and then sell the same options contract on the same day.
That’s considered day trading, and since day traders trade without thinking about a quick profit, they must meet a minimum requirement in order to continue trading.
PDT Rule
So, is pattern day trading illegal? No, it is not.
A user’s margin account can perform multiple day trades if they have a Robinhood cash account.
On the other hand, Instant and Gold account holders must comply with this trading rule no matter what.
It’s important to do about three trades top every 5 business days so you don’t get the PDT flag.
If you make more than three day trades within these five days, then you will be flagged as a Pattern Day Trader.
Pro Tip: When you sign up to Robinhood, you are asked to provide your SSN to Robinhood so you can open an account.
Worry not - doing so is pretty safe and utterly important.
Why Was I Flagged as Pattern Day Traders?
The reason is self-explanatory: you opened new positions and performed more trades during the set period than allowed.
There’s a $25,000 portfolio account value that you must hold if you don’t want to get this flag, but if you close the previous trading day below $25,000, then your account can be limited for three months.
So, before you open and close a position within the same trading day, think twice.
In any case, if you have already been flagged, then we must find a solution to this problem.
How to Remove Pattern Day Trader Status Robinhood
Robinhood’s platform received thousands of new investors every day.
So, whether you are interested in crypto, stock, or day trading, understanding the main limitations and rules of the platform is a must.
Let’s say that you already got the Pattern Day Trader status - how do you remove it?
Read further to find out.
1. Deposit Funds into Your Margin Account
For many traders, this is the only choice.
You must deposit $25,000 into your account and hold the balance so you can perform unlimited day trades.
Then again, remember that you can indeed day trade on Robinhood, but what matters is the closing balance.
If you fail you keep your portfolio with this value, then the day trading restriction will appear.
It’s kind of similar to the Unsettled Funds on Robinhood rule, where you need to wait for a while before being able to get your money out of the platform.
2. Wait for the Day Trade Violation Period to Finish
Normally, users would need to wait for 90 days for their trade limitations to finish.
Clearly, this 90 calendar-day rule can be easily skipped if you manage to get the requested funds into your account.
If this doesn’t seem like a good fit for you, then follow the next solution.
3. Submit a Pattern Day Trader Request
So, if you consider that you shouldn’t be flagged with the Pattern Day Trader status, you must submit an appeal to the platform.
Step 1: Check if You Are Eligible for PDT Rules Reset
If you already complied with the rules, hence, you deposited the necessary funds, then go to the PDT tool on the main client portal.
There, the platform will quickly state whether you are eligible for a PDT reset or not.
Step 2: Click on Submit and Tap the Send Reset Request Button
Fill in the consent declaration and tap on that submit button.
The platform will review your PDT reset application.
If everything is in order, you will be able to trade again in the next one or two business days.
Contact Robinhood’s Support Team
If the issue persists on your profile, don’t Delete Your Robinhood Account just yet.
You must go to Robinhood’s support section and contact customer service as soon as you can.
Nevertheless, keep in mind that Robinhood is pretty strict when it comes to Pattern Day Trading limitations.
At the end of the day, thoroughly following all regulator’s laws is what creates a safe platform for everyone.
For more useful Robinhood content and articles, read everything we have for you here, at GrowFollowing.
FAQ
Is Cryptocurrency Trading on Robinhood Safe?
No trading process is risk-free.
If you are a newbie or a young trader, it’s important to understand that options trading, swing trading, and crypto trading all involve a general risk to your portfolio value.
Losing money can be a pricy mistake, whether you do it on Robinhood or other brokers.
Steve specializes in cryptocurrency and finance. As a born researcher, he won’t leave any stone unturned when it comes to topics he covers.